Forget the lipstick effect, it’s the perfume effect at Coty – WWD

First there was the lipstick effect. Today, Coty Inc. CEO Sue Nabi is interested in the fragrance effect.

Despite recession fears and skyrocketing inflation, Coty’s prestige fragrances soared off the shelves, with particularly strong performances from Hugo Boss, Burberry, Chloé, Calvin Klein and Gucci Beauty, which recorded 20% growth. in the fourth quarter and helped the overall prestige sector is expected to grow 16% year-over-year to $662.8 million.

Fragrance speaks to everyone – regardless of age, regardless of gender, and what we’ve seen, which is the reality of the data and statistics, is that this beauty market is focused by perfume consumption and it’s neither feminine nor masculine. It’s both and it’s mostly Gen Z as well,” Nabi said in an interview with WWD.

Nabi added that Coty sees no signs of declining trade and instead sees the premium category outperforming, particularly on fragrances, while the mass-side premium portion is doing the best.

“What we call high-end beauty is the route that works best compared to what we might call entry-level beauty. It’s probably more difficult and the work we’ve been doing for two years at Coty is clearly to heavily premiumize all portfolios, especially mainstream beauty, but also of course to leverage the super-premium or ultra-premium brands that we have in the portfolio,” Nabi continued.

Consumer beauty revenue rose 3% to $505.5 million, with growth across all product categories and nearly all key brands. CoverGirl’s stock performance improved at the end of the quarter, driven by the very strong performance in the market of the recently launched Exhibitionist Stretch & Strengthen mascara and the easing of its temporary supply constraints on key products. In June, both Rimmel and Max Factor gained global market share.

Travel retail, meanwhile, saw triple-digit growth in EMEA as consumers reacted to the channel’s upscaling and the addition of makeup and skincare portfolios to the category.

Asked about Kim Kardashian’s pricey SKKN by Kim launch earlier this year, Nabi said, “Kim’s skincare line is doing well. It is above our expectations. One of the best-selling products is actually not a product, but the entire line. It was out of stock almost a few days. Whenever we are back in stock, it goes out of stock very quickly. »

As for Kylie Cosmetics, that too is doing well, according to Nabi, launching in Brazil and Mexico. “Today I can tell you that Kylie’s activity is 50% above FY21 levels, so it’s clear the brand continues to grow, particularly in the physical sector.”

But as prestige continues to perform well, headwinds loom on the horizon, particularly inflation, although Nabi insisted the company was well prepared.

“We have implemented single-digit price actions in this second half of FY22. And we are implementing single-digit price increases right now in both divisions over this summer actually … this is how we fight against this inflation.

Fourth-quarter net revenue rose 10% to nearly $1.17 billion, beating analyst estimates of $1.145 billion. Coty posted an adjusted loss per share of 1 cent, an improvement from 8 cents last year, and in line with analysts’ estimates.

Even with the potential headwinds, Coty maintains a positive outlook and expects fiscal 2023 to be a year of continued expansion, in line with its medium-term growth objectives.

Donovan B. Sanford